Michigan program helps child care centers offer benefits to employees
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- The vast majority of child care providers in Michigan cannot afford to offer their employees benefits.
- A new state pilot program looks to change that and reduce employee turnover by setting up an affordable group health plan marketplace through the Small Business Association of Michigan.
A lack of benefits, like health insurance or retirement accounts, has been one of the largest contributors to teacher turnover in early childhood education. Tight budgets prohibit many child care providers from offering their employees the kind of comprehensive benefit packages that are common across other educational professions.
Coupled with industry-wide low pay, having no benefits can make it difficult for teachers to stay in the job, and “continue to put their families and themselves in such bad financial positions,” said Joan Blough, a director at the Early Childhood Investment Corporation, which supports Michigan’s early childhood system.
A new program aims to change this.
A two-year pilot program, slated to kick off in the fall, will create a marketplace where child care providers can purchase benefits, including health insurance, 401(k), and life and disability benefits, to offer their employees. The state is working with the Small Business Association of Michigan, or SBAM, to group early education businesses as an association and negotiate with insurance carriers on their behalf.
More than half of the people who work in early education and child care settings in Michigan are uninsured or on Medicaid, according to an SBAM survey of more than 1,000 early education workers, and the vast majority of early education teachers lack retirement savings, according to experts in the field.
The effort, which the state said is likely the first of its kind in Michigan, also includes a state subsidy to ensure these insurance rates are affordable for business owners, said Michelle Beebe, chief revenue officer of SBAM.
“This industry is asking for support, to be treated as businesses and not as babysitters,” Beebe said. “We want employees to come in and feel this is a valid employment opportunity for them, not just a stepping stone to something else, so that kids in care have regular, consistent providers in their life.”
Beebe said she believes the pilot will allow for a more stable child care business ecosystem by making it a more viable career path. “I think it’s really going to make a difference,” Beebe said.
The pilot sets up a Multiple Employer Welfare Program in partnership with Blue Cross Blue Shield. The benefits program will be governed by a board of child care providers, which means that decisions, like approval of plan offerings, will be made by business owners in this industry, Beebe said.
The benefits pilot would be a step toward getting early educators’ access to total compensation on par with K-12 teachers, professionals with whom they often share degrees and credentials but receive significantly less in terms of wages and benefits, said Blough.
The $4.4 million investment is funded through a three-year, $33 million federal early childhood grant awarded to MiLEAP, the state agency overseeing early education initiatives, in 2024. Early education business owners and employees will be able to begin enrolling in benefits in fall 2025, with benefits activating on Jan. 1, 2026. All active licensed child care providers across the state will be eligible to participate and can enroll throughout the year.
Tyler Huntey owns a network of seven child care sites across western Michigan called Huntey’s Clubhouse and said the pilot would change his life and that of his employees. Huntey’s child care business is one of the largest providers in Michigan and, as such, federal law requires it to provide health insurance to employees.
But those benefits “are not great and still expensive for team members,” he said. Huntey estimates he’s spending six figures for pricey and mediocre health insurance for the businesses’ 190 employees, including himself. For his family of four, all in good health, he pays nearly $24,000 annually for health insurance.
His business doesn’t offer retirement benefits even though employees have asked, because they haven’t found an option they can afford. Huntey said he looks forward to being able to access what he assumes will be higher quality group benefit plans at affordable rates through the MiLEAP and SBAM pilot.
“I give MiLEAP a lot of credit and commend them for using some of this funding for this pilot,” said Huntey, who acknowledged the funding could have gone to any number of initiatives and appreciates that some went toward addressing a problem providers have been vocal about for some time. Huntey also serves as the president of the Michigan Childcare Provider Collective, an organization that advocates on behalf of the industry.
The benefits pilot comes at an opportune time for two reasons. First, Huntey said, a minimum hourly wage increase to $15 will be effective at the beginning of 2027. Being able to access an affordable group health plan through the state means “we’ll be able to reallocate funds toward teacher wages,” he said.
Second, there’s a looming possibility some Michiganders could get kicked off Medicaid given federal cuts recently passed through Donald Trump’s “big, beautiful bill” — 200,000 to as many as 700,000 depending on the analysis. Given that a large portion of early educators are on Medicaid, “the pilot timing is kind of perfect,” Beebe said. “Some people may be displaced with changes to Medicaid and at least this provides options and a safety net for people.”
Though the pilot is only funded for two years, both SBAM and MiLEAP said they intend to secure permanent state funding to keep it going. SBAM will be monitoring program impacts throughout the pilot to see whether the benefits program improves retention of early educators, which is data Beebe said could be used to advocate with Michigan lawmakers for a permanently funded program.
There also has been interest from private funders in the state looking to keep the child care benefits program sustainable in the long term. “They have vested interest in their communities … because child care affects all of us,” Beebe said.
Beki San Martin is a fellow at the Detroit Free Press who covers child care, early childhood education and other issues that affect the lives of children ages 5 and under and their families in metro Detroit and across Michigan. Contact her at [email protected].
This fellowship is supported by the Bainum Family Foundation. The Free Press retains editorial control of this work.
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